Airport and tollway retail giant Autogrill may split in two to maximize value

Reuters

- Feb 02, 2013 12:03 am

Skift Take

Rumors of the shakeup sent shares soaring as speculation of a tie-up between the growing retail unit and Swiss retail group Dufry peaked European investors’ interest.

— Samantha Shankman

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Autogrill, the world’s biggest airport retailer, may split its business in two, a move that could help revive its main food operation and lead to a merger for the retail division.

The Italian company, which operates in airports and motorways across 38 countries, said on Friday it was studying a reorganisation that might involve a partial demerger of its smaller, but growing, travel retail unit.

The announcement of the possible split, which has been the subject of market speculation for the last two years, sent Autogrill shares to their highest since May 2011.

Autogrill – controlled by Italy’s Benetton family whose business empire also includes motorway operator Atlantia – has grown through acquisitions in recent years, building up net debt of around 1.4 billion euros.

The food and beverage unit has been suffering from a drop in sales on Italy’s motorway network, where it operates a chain of restaurants, as a recession hits travellers’ pockets.

“We consider this is a catalyst for the stock … we feel the timing for a demerger is the right one,” Mediobanca analysts said in a note, placing its rating on the stock under review.

A person familiar with the matter said advisors would be appointed in the next few weeks, while it would take a few months to work through the separation.

“Then the company will see,” the person said.

Creating value

Switzerland-based Dufry, a travel retail group with over 1,200 shops in 43 countries, is seen as a good fit for a tie-up with Autogrill’s travel unit given the Italian group’s presence in attractive tourist destinations in Spain and Italy.

Analysts said a merger of the two would create few overlaps and good scope for synergies and highlight the potential for value creation at the Milan-based company. A separate listing of the retail business is another option.

A weighted average estimate by Thomson Reuters StarMine values Autogrill at 6.1 times its 2013 core profit, below Dufry’s 8.4 times. Restaurant groups Sodexo of France and British peer Compass have multiples of 8.5 and 9.6 times core profits, respectively.

In 2011, Autogrill renegotiated loans between the two businesses, a move analysts said was a first step toward a separation.

By 14:14 GMT, shares in Autogrill were up 3 percent at 9.31 euros. The European retail index was up 0.6 percent.

Analysts said a reorganisation was more likely after Autogrill outbid rivals in December to run duty-free shops at 26 airports in Spain.